What Amazon’s HQ2 Wish List Signals About the Future of Cities

Executive Summary

Amazon’s bombshell announcement that it will build a second headquarters in another North American city has caught the attention of state and local officials, economic development professionals, and pundits across the country. Amazon’s selection criteria, as described in the company’s request for proposal, sets out a compelling list of the attributes cities must have if they aspire to be a serious part of the America’s growing digital economy. Cities need to look closely at the criteria in Amazon’s RFP and ask whether they’ve done enough to build up the fundamental assets prized by innovative firms and industries.

Jennifer Maravillas for HBR

Amazon’s big announcement that it will build a second headquarters has caught the attention of local officials, economic development professionals, and pundits across the U.S. and Canada. And for good reason: “HQ2,” as it’s being called, would create upwards of 50,000 high-paying jobs and billions of dollars of new investment in whichever city it locates in. The city that lands this historic deal will see its economic and physical landscape transformed, albeit for a hefty price tag in the form of tax breaks.

Thus far, public attention has largely focused on two aspects of Amazon’s announcement: Speculation about which of the 50 eligible North American metropolitan areas are most likely to be chosen for HQ2, and how much public subsidy the winning city will offer the world’s 4th-largest corporation to seal the deal.

But this announcement carries far more profound implications for regional and local economic developers, Amazon HQ2 hopefuls or not. Amazon’s selection criteria, as described in the company’s request for proposal, sets out a compelling list of the attributes cities must have if they aspire to be a serious part of the America’s growing digital economy.

As our research has shown, the vibrant metros of the future will be those that are home to high-tech advanced industries. That’s because those industries spur the collision of digital technologies and cutting-edge business development, also brought about by tech-savvy workers and R&D investments, and generate jobs and good wages in a period of sluggish economic growth. Digital industries are a main driver of growth within these high-value industries. Yet for all their benefits and buzz, digital jobs continue to geographically concentrate in established high-tech meccas at a time when our nation needs more metro areas, especially in the heartland, to gain a competitive foothold in the digital future.

So how can cities garner a bigger share of high-tech growth? The answer is not to just polish up branding and marketing materials and wait for the next Amazon-scale business attraction opportunity. Nor is it to concentrate entirely on traditional economic development strategies of bundling available plots of land for prospective businesses and offering generous subsidies (though admittedly, Amazon seems to want a bit of that, too). Rather, cities need to look closely at the criteria in Amazon’s RFP and ask whether they’ve done enough to build up the fundamental assets prized by innovative firms and industries.

Amazon’s wish list is an unusually public confirmation from one of the most recognized corporations in the world of the factors that make a local ecosystem relevant in today’s innovation economy. Among these factors are:

Capacity to produce skilled, technical talent. The importance of talent pervades the Amazon RFP, with special mention of a “strong” university system, computer science programming in the K-12 education system, and opportunities for creative partnerships with community colleges and universities.

Access to domestic and global markets through modern infrastructure. Amazon dwells extensively on the importance of proximity and connectivity to population centers. It seeks a strong infrastructure network of highways, international airports, and high-speed broadband to streamline logistics, conduct business, and access major employment pools.

Connected and sustainable placemaking. The Amazon RFP reads like an urban planner’s dream, brimming with calls for energy efficient buildings, recycling services, public plazas, green space, and access to multiple modes of transportation. While Amazon will apparently consider greenfield sites as well as existing developments for its new headquarters, it emphasizes its interest in promoting walkability and connectivity between densely clustered buildings through “sidewalks, bike lanes, trams, metro, bus, light rail, train, and additional creative options.”

Culture and diversity. Promoting an inclusive culture matters to Amazon. The RFP specifically calls for “the presence and support of a diverse population,” along with excellent higher education institutions and functioning local governance.

In sum, the Amazon RFP very clearly embodies a series of forward-thinking business values of global engagement, diversity, and environmental stewardship.

Amazon is also signaling very clearly and publicly what the market demands for modern, state-of-the-urban economic development going forward.

As each of us has written about extensively, regional economic development is about growing from within. It requires helping existing firms expand and innovate, supporting entrepreneurs, creating industry-relevant skills programs, and strengthening other local assets that improve the economic prospects of local industries and workers. These attributes, even more than incentives packages, will attract the attention of outside firms interested in being part of a region’s unique ecosystem.

So rather than get distracted by the city vs. city competition brought about by Amazon’s announcement, state and local economic development leaders need to bear down on reinventing the way they do business. Amazon’s HQ2 will only be located in one city, but the path to prosperity in a hyper-digital global economy is attainable for cities that invest in people, infrastructure, and quality places.

Amy Liu is Vice President and Director of the Metropolitan Policy Program at the Brookings Institution.